Making Medicaid Work for Mental Health Services

More financial support for mental health services comes from the Medicaid program than any other source. Private insurance is a close second with state/local funds in third place.

A recent publication from the Center on Budget and Policy Priorities “States are using flexibility to create successful innovative Medicaid programs” offers an optimistic take on what can be a discouraging topic. Often, Medicaid’s complexity and requirements for coordination and approvals are daunting enough to stop even the most determined advocate from finding ways to use the dollars more effectively.

The publication describes two state programs that are succeeding in providing improved services to people with mental illness and saving the states money. Wisconsin and one other state are praised for innovative approaches to other populations.

Missouri’s Medicaid and mental health agencies established “health homes” that integrate behavioral health care and primary health care with the aim of decreasing hospital stays. A team of providers identifies people in need of help and connects them with the appropriate medical, social, and mental health care services. Data show a significant decline in emergency room visits and hospitalizations and a savings in Medicaid dollars.

Oregon has taken a more ambitious approach. Central to its effort is a move from “fee for service” to capitation. Although fee for service appears to be a logical approach to funding medical care, it has resulted in escalating health care costs because practitioners are rewarded for the number of procedures they perform instead of the outcomes for their patients.

Oregon created coordinated care organizations (CCOs), which are integrated community-care organizations that are responsible for providing all medical, mental health, and dental care services for their members in a specific part of the state. They receive a capitation payment or amount per enrollee that is to cover all services. It is to the advantage of the CCO to provide services that prevent unnecessary hospitalizations and other expensive care. The largest CCO in Oregon has cut emergency department visits by 18 percent and met all of the quality measures by which it is judged.